Kimberly Otocki is a content marketing specialist at Paytronix working in the convenience store space. With a passion for telling stories, she helps bolster the Paytronix brand through content creation and data analysis. Kimberly loves sharing relevant content to help businesses discover the marketing solutions they need.

Loyalty programs are a great way to retain customers and keep them coming back to the store time and time again. In fact, by increasing customer retention by just 5 percent, brands can increase profits by 25 to 95 percent, which is why loyalty programs are a go-to marketing source. But there is one major problem with today’s loyalty programs – there has been a 2 percent decline in overall active member rates which leads to slower growth and profits for brands.

What is causing this decline in active participation, and how can brands turn it around to fix this problem?

There are a couple of new insights that help shed a light on the cause of this decline and the tactics that can mitigate and even turn around loyalty programs so they are profitable and engaging to customers. […]

Reward programs have been around for years. Airlines, hotels, and restaurants adopted these programs decades ago. Convenience stores, on the other hand, seem to prefer club programs and simple promotions like 3 cents off per gallon or short-term, low-value programs.

At a high level, mass promotions are a great business strategy, driving more visits and spend. Most of the time they are also paid for by the CPG vendors, so the cost of running these promotions is minimal to the convenience store. Mass promotions and eblasts get brands quick wins and compel customers to make purchases with the incentive of getting an item for free.

Most mass eblast promotions are the standards “Buy 1 coffee, Get 1 coffee Free.” Let’s think about this from the customers’ point of view, a very frequent customer who comes in every day for their morning coffee before they head off to work could get a free coffee just like the customer that has maybe come in once or twice would be able to get the free coffee with their purchase. The fact is, the customer that comes in every day would have been willing to purchase that cup of coffee at full price. You are essentially rewarding the frequent customer with a free coffee for not changing their behavior or driving an incremental visit or spend and eroding the revenue you did get from driving the customer who has not come in as much and did change their behavior. […]

In case you haven’t already heard, loyalty programs deliver outstanding financial returns to restaurants by motivating guests to visit more often and spend more on each visit. Simply put, if you want to maximize your restaurant’s revenue, you need loyalty.

However, when we talk about loyalty, we don’t mean the standard “buy five items, get one free” deal that comes along with a paper punch card. That was loyalty 1.0. Loyalty 2.0 delivers far greater ROI but is a more complex science. To be successful at it, you’ll need to address the following questions:

Which program will best engage and compel your guests?

What type of loyalty program aligns with your concept type and brand?

What kind of program can your staff effectively execute?

Which program will help you achieve your restaurant’s financial goals?

Most convenience stores share similar reasons for having a reward program – such as improving profitability and enticing customers to make incremental sales – but all reward programs are not created equal, and a one-size-fits-all approach may not produce the outcomes that retailers want.

Whether you’re a Paytronix customer, a restaurateur, a tech guru, a savvy loyalty marketer, or somebody who stumbled upon us by the whims of Google, we promise that you’ll find informative and beneficial content here.

We’ll be using this space to initiate conversation about the things that we love: reward programs, guest engagement, big data, and the restaurant industry.

Reading this blog will keep you informed about all new theories related to acquiring and retaining guests so that you can improve their LTV.